Difference Between Internationalization and Globalization

Edited by Diffzy | Updated on: June 06, 2023

       

Difference Between Internationalization and Globalization

Why read @ Diffzy

Our articles are well-researched

We make unbiased comparisons

Our content is free to access

We are a one-stop platform for finding differences and comparisons

We compare similar terms in both tabular forms as well as in points


Introduction

In the dictionary internationalization and globalization may have the same meaning. However, they are different in matters of economy.

Internationalization is the expansion of a business, service, or operations in a global market. It is the entrance of doing business in other countries keeping in mind the differences in culture, economy, and traditions in other countries.

Globalization is the interdependence of countries around the world in matters of economy, politics, and culture. It is a process that encourages the exchange of products, services, technology, information, jobs, etc., between different countries across the globe.

Internationalization and globalization are related to each other. Internationalization is a step towards globalization. Due to the vision of some companies of extending their business to other countries, relations are made between these countries. More and more companies are encouraged to do the same, and in that process, it boosts the move toward globalization. Globalization also sets up a base for companies to go global. Due to connections between countries, it is easier for firms to expand their business overseas.

Therefore internationalization and globalization are connected. However, they are not the same.

Internationalization vs Globalization

Internationalization is the process of making products that match the culture and demands of foreign countries to expand the business of a firm. Globalization, on the other hand, is the connection and interdependence of countries around the world in matters of trade, services, jobs, technology, etc.

Internationalization aims at expanding a business in foreign countries. Globalization aims at making trade and commerce easier between different countries and having an open economy.

Internationalization is concerned mainly with the business of a firm, while globalization includes the connection of world leaders on international platforms to discuss serious issues, free trade for better and cost-effective transportation, integration of culture, etc.

Likewise, there are many other differences between them.

Difference Between Internationalization and Globalization in Tabular Form

ParameterInternationalizationGlobalization
DefinitionInternationalization is the process of expansion of business, or services in foreign countries.Globalization means the interdependence and integration of countries around the world in matters of services, jobs, trade, culture, etc.
Related toIt is related to a company and its business.It is concerned with connections between countries for economic growth.
Affected byIt is affected by the culture and preferences of different countries.It is affected by infrastructure, logistics, telecommunication, etc.
FocusIt focuses on the expansion of business in foreign countries for growth and profit.It focuses on the free flow of goods, services, people, and capital.
ResultsIt results in the popularity of the firm in various countries and its profit.It results in the removal of barriers to the movement of people, products, and services between countries.

What is Internationalization?

Internationalization, simply, means the process of making a firm internationally recognized. It is the act of making a product recognizable in foreign countries by keeping their culture and preferences in mind.

If a firm wants to increase its footprint in the global market it needs to research what are the preferences of the people in foreign countries. The company would have to design its products accordingly.

Some firms also experiment with whether people would accept something different than what they usually are used to. This strategy should be implemented carefully and on a small scale so the firm would not have to endure excessive loss in the business. It works out sometimes, but there is a risk of failure.

As more and more firms go for internationalization, it makes a drastic change in the way people view business and connections between different countries. It encourages the move towards globalization.

Examples of internationalization are - McDonald's, Dominos, PizzaHut, and many such firms operating in various countries of the world.

Motive of Internationalization

  • Growth – Firms may not be able to grow as much in the local market. Therefore, they choose to expand their business in foreign countries to see the growth that they always wanted.
  • Profitability – Limited customers in the local market may not bring enough profit for the business. Setting their foot in the international market may bring them more customers and that too a variety of them. The firms can sell the products at a higher price when compared to local markets. This will increase the profitability of the businesses.
  • Lower the risk of failure – By choosing to go international, the firms lower their risk of failure. If one market does not work well for the products another market may continue working smoothly. This will maintain the budget of the business and will give enough time to improve the situation in the other market.
  • Increase competitiveness – Expanding a business in the international market would make the firm more popular among customers. The company would be recognized as a renowned company. It would work more efficiently to match the level of or be better than other multinational companies.

How does a company enter international markets?

  • Export – Here, the firms produce the products locally and export them to other countries. It is said to be the most popular among the firms.
  • Direct Investment – This involves the business setting up manufacturing overseas or merging or taking over a business overseas. It involves huge risk, and a business has to invest a lot of budget for it.
  • Licensing – Companies grant licenses to other firms in foreign countries to manufacture and sell their products in exchange for a fee paid by the licensee.
  • Franchising – It is similar to licensing, except the original firm still has some control over the processes of manufacturing and marketing the products.
  • Joint Ventures – Here, the company partners with another company overseas to take advantage of the latter's knowledge and experience at the place it is functioning.

What is Globalization?

Globalization is the interdependence and connection of countries across the globe in matters of trade, technology, services, etc. It is a move towards removing the blockade between countries for easy trade, the movement of people, the exchange of products and services, and the integration of culture.

In the last few decades, it had a great impact on global relations. It has allowed people around the world to interact with one another freely, and this led to a boost in the economy of the world.

Globalization also made an impact on the political and social scenario of the world. Leaders from across the world come together to discuss issues and plan out strategies to solve them. Meetings are held for action against climate change, poverty, and terrorism, or to plan action towards a better economy, better living standards for people, maintenance of human rights around the world, etc.

Examples of globalization are - Automobile manufacturing companies getting various parts from different countries and making the finished product in one country.

Motive of Globalization

Globalization has more or less achieved its motives. The factor below has influenced the process of globalization:

  • Freedom of Trade – Globalization has helped in removing barriers between countries to allow free trade.
  • Improvement in Transportation – Globalization has made the transportation of goods easier and cheaper. Since many companies have indulged in trading with other countries larger cargo ships are required to export so many products altogether. Transportation has gotten cheaper due to its advances. Globalization also made it easier for people to travel more to foreign lands.
  • Improvement of Technology - Globalization has had a huge impact on the technology of countries. Greater technology means faster and better transportation, better healthcare, easy access to education, better connectivity, and much more.
  • Improvement in Communication – Globalization made it easier to communicate and connect with people living in the farthest of countries. This has influenced the integration of various cultures around the world.
  • Availability of Labor and Skills – Some countries are overflowing with skilled and unskilled manpower but no jobs to offer. Other countries lack the manpower to do the jobs required at low labor costs. Globalization had made way for companies to set up their business or service centers in various countries with the availability of labor and low labor cost. Many people also venture out to different countries for good jobs and a better standard of living. When countries connect, their people connect

How does Globalization Work?

Various countries have different advantages over others. Some countries have abundant natural resources, while others are advanced in technology. Some countries have available manpower, while others have enough job opportunities. A globalized economy lets countries take advantage of their resources, and send them to countries deprived of them in exchange for other resources or money.

Countries specializing in some products must work very efficiently to produce them with very little exploitation of the environment and cost-effectiveness. This is how they can compete with other countries that may have the same resources.

Countries deprived of certain resources would connect with countries that can provide these resources at a lower cost. They would create policies that allow free trade of the products or raw materials to reduce expenses. Hence, it results in economic growth.

The internet also played its role in connecting people from various countries around the world. It changed how people view the cultures and customs of people in other countries. It made the flow of information easier among people from different ethnicities. People started investing more in understanding various forms of arts and crafts.

Advanced transportation has made the movement of people and goods easy and cost-effective. People can travel for job opportunities in other countries or to explore the world.

The flow of goods, people, money, and material between countries has been swift and easy due to globalization.

Organizations like World Trade Organization, The World Bank, World Health Organization, United Nations, etc., are some organizations and institutes involved in global governing and international economic development.

It must be noted that globalization is not only about advantages. There are several disadvantages of globalization if countries become greedy. Some countries have overused their natural resources to gain more money from them. They even mistreat workers and overload them with work for a wage that cannot fulfill their needs. While international organizations exist to control such a mess, it is still tough to stop them as the livelihoods of people are often on the line.

Globalization itself is not a problem, but the greed of the people in power can harm the environment and people.

Main Differences Between Internationalization and Globalization in Point

  • Internationalization is the process of producing goods for foreign customers while keeping the likes and preferences of people in different countries in mind, whereas globalization refers to the interdependence of countries in matters of resources, products, technology, services, etc.
  • Internationalization is related more to a firm’s decision of expanding its business in the international market. Globalization, however, is concerned with the world’s economy, as various countries have decided on free trade for shared economic growth.
  • The move towards internationalization is to make a firm’s reputation go higher and for the firm to earn more profit. On the contrary, globalization is a process motivated towards making connections between different countries and exchanging goods and services to fill up their requirements.
  • Internationalization is one of the tasks or processes to achieve globalization, while globalization is a result. However, at present, globalization has created a base for firms to internationalize their business.

Conclusion

Internationalization and globalization are interconnected. They have made a huge impact on the relations between different countries. However, they are different terms and have different meanings. Internationalization is related to a firm expanding its business in the international market. Globalization, on the other hand, is a process to connect the world towards a better economy, integration of culture and diversity, and shared political activities. Globalization is a broader term than internationalization. Internationalization encourages the move towards globalization, and globalization has also made it easy for firms to expand their business in the international market. Both of the processes are, therefore interdependent.

While they both have many advantages for economic development and connection between various countries, we must understand that it may also result in the over-exploitation of resources and manpower. Hence, countries must be aware of utilizing resources sustainably in keeping human rights in mind.

References

  • https://www.techtarget.com/searchcio/definition/globalization
  • https://www.studysmarter.co.uk/explanations/business-studies/business-development/internationalisation/
  • https://byjus.com/commerce/characteristics-of-globalisation/
  • https://www.bbc.co.uk/bitesize/guides/zxm3srd/revision/2

Category


Cite this article

Use the citation below to add this article to your bibliography:


Styles:

×

MLA Style Citation


"Difference Between Internationalization and Globalization." Diffzy.com, 2024. Thu. 28 Mar. 2024. <https://www.diffzy.com/article/difference-between-internationalization-and-globalization>.



Edited by
Diffzy


Share this article